'Market Street Advisors' Merriman Sentenced for Ponzi Scheme

However, Krieger gave Merriman a harsher prison term than federal guidelines required, citing his betrayal of family, friends and church members, and the risk that he might reoffend.

"This gets into the confusion names and titles and the level of liability associated with each," says Kathleen McBride, editor of Wealth Manager Web and a member of the Committee for the Fiduciary Standard, a group that advocates for the Investment Advisers Act of 1940 as the industry fiduciary standard. "If nothing else, if they call themselves an investment advisor, they have to have a third-party auditor and third-party custodian. They'll have a fiduciary duty to clients that they will have to constantly prove. But if they act accordingly under the investment advisor label, they'll be better protected against legal action."

McBride notes the reason for most suits currently brought against brokers is for breach of fiduciary duty. But the SEC, stung by criticism in the wake of the Madoff scandal, is also stepping up investigations and enforcement actions.

"Madoff was his own custodian and had his own two-man auditing team that was supposedly independent," McBride adds. "So you'll see the SEC take a much harder look at those claiming to call themselves investment advisors."

Under the sentence, Merriman will also face three years of supervision upon his release.